Competition Bureau steps up probe into Loblaw’s dealings with suppliers

Canada’s Competition Bureau has subpoenaed several food and beverage suppliers of Loblaw Companies Ltd. in an ongoing investigation into pricing practices following its takeover of Shoppers Drug Mart.

A spokesman for the regulator confirmed in an email Monday that the bureau stepped up its probe into certain practices related to “pricing strategies and programs” by Loblaw with its suppliers which “could raise concerns under the Competition Act.”

Greg Scott said the bureau filed 12 applications with the Federal Court last week requiring certain grocery suppliers to provide records and written returns of information that are “relevant to our investigation.”

“The bureau is looking at these practices and the impact that they could have on competition in the marketplace,” Scott said.

When the Competition Bureau approved Loblaw’s controversial $12.4 billion acquisition of Shoppers earlier this year, it imposed certain “behavioural restrictions” on the grocer related to its agreements with suppliers for up to five years, Scott noted.

The industry feared at the time that the merger of one of Canada’s biggest grocers with the country’s largest pharmacy chain would likely lead to higher wholesale prices paid by other retailers, which could lead to higher prices for consumers.

“Given it’s the nation’s largest-ever retail acquisition, we understand the bureau’s interest in maintaining competition in the marketplace,” said Kevin Groh, Loblaw’s vice president, corporate affairs and communication, in a statement.

“We don’t believe our commitment or practices are inconsistent with a competitive market. But, we continue to co-operate with the bureau and have worked to provide them the clarity they require,” adding the supermarket chain is an “active advocate for customers.”

A spokesman for the Canadian Federation of Independent Grocers said the investigation is important so that smaller retailers can continue to compete.

“The distortions in the marketplace are not good for suppliers, for independent grocers and ultimately, not good for consumers,” said Gary Sands.

“To us, the ongoing concerns the bureau has validates our call for a code of conduct in the retail grocery industry in Canada,” he said.

The mega-merger gave big grocers 90 per cent control of the industry compared to the former 80 per cent.